Martin Marietta Materials, Inc.

Good morning, ladies and gentlemen, and welcome to Martin Marietta's first quarter 2019 earnings conference call. My name is Howard, and I will be your coordinator today. At this time, all participants have been placed in a listen-only mode. A question-and-answer session will follow the company's prepared remarks. As a reminder, today's call is being recorded. I will now turn the call over to your host, Ms. Suzanne Osberg, Vice President of Investor Relations for Martin Marietta. Ms. Osberg, you may begin.

Good morning, and thank you for joining Martin Marietta's first quarter 2019 earnings call. With me today are Ward Nye, Chairman and Chief Executive Officer, and Jim Nicholas, Senior Vice President and Chief Financial Officer. To facilitate today's discussion, we have made available during this webcast and on the investor relations section of our website, Q1 2019 supplemental information that summarizes our quarterly results and trends. As detailed on slide two, This conference call may include forward-looking statements, as defined by securities laws in connection with future events, future operating results, or financial performance. Like other businesses, we are subject to risks and uncertainties that could cause actual results to differ materially. Except as legally required, we undertake no obligation to publicly update or revise any forward-looking statements, whether resulting from new information, future developments, or otherwise. we refer you to the legal disclaimers contained in today's earnings release and other filings with the Securities and Exchange Commission, which are available on both our own and the SEC website. As a reminder, all financial and operating results discussed today are for the first quarter 2019. Any comparisons are versus the prior year first quarter, unless otherwise noted, and all margin references are based on revenues. Furthermore, non-GAAP measures are defined and reconciled to the nearest GAAP measure in our Q1 2019 Supplemental Information and SEC Filings. We will begin today's earnings call with Ward 9, who will discuss our first quarter operating performance as well as market trends. Jim Nicholas will then review our financial results. A question and answer session will follow. I will now turn the call over to Ward.

Thank you, Suzanne, and thank you all for joining today's teleconference. Martin Marietta's strong first quarter performance provides a promising start to what we expect to be another record year for our company. Consolidated total revenues increased 17% to $939 million, and earnings before interest, taxes, depreciation, and amortization, or EBITDA, increased 28% to $159 million, both new first quarter records. We also achieved strong gains in other key financial metrics, including a 140 basis point expansion in consolidated gross margin and earnings per diluted share of 68 cents. Notably, shipment volume and pricing improved across the majority of our building materials business, including robust double-digit growth in aggregate shipments as more favorable weather allowed for an earlier onset to the construction season, and our customers were able to begin addressing both prior years' weather-deferred projects and current backlogs. Consistent with our expectations, public and private sector construction growth in our leading markets is outpacing the nation as a whole and supports our view of continued pricing momentum. These trends bode well for increased construction activity and position Mark Marietta for improved shipments, pricing, and profitability for the remainder of 2019. We have consistently maintained that attractive market fundamentals, including continued employment gains, population growth, and superior state fiscal health will promote sustainable and long-term construction growth across our geographic footprint. Our first quarter results clearly demonstrated that robust underlying demand, demand that failed to translate into higher shipment volumes in 2018 due to contractor capacity constraints, logistics disruptions, and most significantly, poor weather. For example, our Heritage Mid-Atlantic Division, which includes the Carolinas, Virginia, and Maryland, benefited from strong pent-up demand and more favorable weather conditions. These dynamics, just to name a few, resulted in heritage aggregate shipments that eclipsed the division's 2007 peak first quarter volumes. While winter weather traditionally limits the ability of outdoor contractors to perform work, modestly improved weather in the first quarter of 2019 provided contractors the opportunity to advance both new and delayed projects. The notable exception was in Colorado, the company's second largest state by revenues. Colorado experienced one of its harshest winters on record in terms of precipitation and temperatures, limiting construction activity and negatively affecting the aggregates, ready-mix concrete, and asphalt and paving businesses of our Rocky Mountain division. Heritage aggregate shipments increased 12.5%, led by double-digit volume gains in the Mid-America and Southeast groups. Importantly, all divisions, with the exception of Rocky Mountain, contributed to this robust shipment growth, demonstrating the strength of Martin Marietta's markets and breadth of accelerating demand. Heritage aggregate shipments to the infrastructure market increased 2% as modestly improved weather, particularly in the southeast, allowed customers to commence transportation-related projects earlier in the construction season. Importantly, Our North Carolina, Georgia, and Florida operations saw increased infrastructure activity during the quarter following the recent acceleration in public lettings and contract awards in these key states. Consistent with our expectations when we established 2019 guidance, we believe public construction, particularly for aggregates-intensive highways and streets, is poised for meaningful growth in 2019 and beyond, driven by funding provided by the Fixing America's Surface and Transportation Act, or FAST Act, and numerous state and local funding initiatives. Our top ten states, which accounted for 85 percent of total building materials revenues in 2018, have all introduced incremental transportation funding measures within the last five years. Increased state-level funding through bond issuances, toll roads, and tax initiatives is expected to continue to grow at a faster rate than near-term federal funding, leading to additional growth opportunities for our company. The infrastructure market represented 33% of our first quarter heritage aggregate shipments, which is below the company's most recent 10-year annual average of 46%, but consistent with first quarter historical trends. Heritage aggregate shipments to the non-residential market increased 33 percent as we continued to benefit from robust distribution center, warehouse, data center, and wind turbine projects in key geographies including Texas, the Carolinas, Georgia, and Iowa. Looking ahead, our non-residential construction outlook remains positive with third-party forecasts including the Dodge Momentum Index projecting healthy commercial construction activity particularly in our southeastern and southwestern regions. Additionally, large energy sector projects along the Texas Gulf Coast are expected to increase demand for heavy building materials. Throughout the balance of 2019, the company will continue to supply products for three previously awarded energy projects. Five additional projects are pending regulatory approvals or awaiting contractor and or supplier selection and are expected to begin in earnest in 2019 and continue for several years thereafter. Martin Marietta is well-positioned to provide the aggregates, cement, and ready-mix concrete needs for these multi-year projects. The non-residential market represented 37 percent of first-quarter heritage aggregate shipments. Heritage aggregate shipments to the residential market increased 8 percent, driven by weather-deferred homebuilding activity in the Carolinas, Georgia, and Florida. Despite the recent slowdown in housing unit starts at the national level, the residential outlook across Martin Marietta's geographic footprint remains positive, driven by favorable demographics, job growth, land availability, steady interest rates, and efficient permitting. Currently, housing unit permit growth for our top 10 states is outpacing the national average for all three residential categories, total, multifamily, and single family. In our view, The issuance of these permits represent the best indicator of future housing construction activity. The residential market accounted for 23 percent of first-quarter heritage aggregate shipments. To conclude our discussion on end-use markets, the Chemrock rail market accounted for the remaining 7 percent of first-quarter heritage aggregate shipments. Volumes to this sector increased 9 percent, reflecting lower-balanced and agricultural line shipments. Heritage aggregates pricing improved 4 percent following the implementation of annual price increases throughout the majority of our geographic footprint. We were able to achieve this solid growth despite unfavorable product mix from increased shipments of lower priced base stone, which reduced first quarter heritage average selling price by 29 cents per ton or 210 basis points. Keep in mind, An increase in base stone shipments is only unfavorable from an average selling price optics viewpoint. In fact, given that base stone is typically the initial material needed for early stage construction activity and higher price clean stone shipments subsequently follow, we're encouraged by this trend. Drilling down to geographical trends, we achieved heritage price and growth of 3% for the Mid-America Group. This was accomplished through continued price discipline, offset by product mix from base shipments. Price discipline led to 6% heritage price and growth for the Southeast Group. Product and geographic mix, particularly from weather-impacted Colorado shipments, limited West Group price and growth to 3%. Acquired operations shipped 3.5 million tons at selling prices approximately 15% below the corporate average. As a reminder, beginning in the second quarter, Results for the legacy bluegrass operations will be classified as heritage for reporting purposes. Cement shipments improved 7%, driven by the strength of the Texas market, increased shipments of oil well products, and the addition of our new Caney sales yard in Houston. First quarter cement pricing benefited from favorable product and geographic mix, increasing 4%. Annual price increases went into effect on April 1st with widespread support in both north and south Texas. We believe our cement operations will continue to benefit from a tight supply environment in Texas, as forecasted demand is expected to exceed domestic production capacity by 10% in 2019. Turning to our downstream businesses, ready-mix concrete shipments decreased 4% as Colorado's harsh winter hindered early construction activity in that state. First quarter pricing improved modestly for the ready mix business in total, led by a 3% increase in Colorado. As a reminder, the majority of annual price increases became effective on April 1st in both Colorado and Texas. Our Colorado asphalt and paving business lost production days from extreme winter weather, including freezing ground temperatures, resulting in reduced asphalt shipments. First quarter asphalt pricing in Colorado improved 4%, Importantly, bidding activity and customer confidence remain strong, and we're highly confident in the strength of the Colorado market. I'll now turn the call over to Jim to discuss specifics of our first quarter financial results. Jim?